Chapter 1 Foundations of Information Systems in Business

James A. O'Brien, and George Marakas. Management Information Systems

Foundation Concepts

Why study information systems and information technology? Vital component of successful businesses Helps businesses expand and compete Improves efficiency and effectiveness of business processes Facilitates managerial decision making and workgroup collaboration

Chapter 1 Foundations of Information Systems in Business

What is a System?

A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives

Chapter 1 Foundations of Information Systems in Business

What is an Information System?

An organized combination of People Hardware and software Communication networks Data resources Policies and procedures This system Stores, retrieves, transforms, and disseminates information in an organization

Chapter 1 Foundations of Information Systems in Business

Information Technologies

Information Systems All the components and resources necessary to deliver information and functions to the organization Could be paper based Information Technologies Hardware, software, networking, data management Our focus will be on computer-based information systems (CBIS)
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Chapter 1 Foundations of Information Systems in Business

What Should Business Professionals Know?

Chapter 1 Foundations of Information Systems in Business

Fundamental Roles of IS in Business

Chapter 1 Foundations of Information Systems in Business

Trends in Information Systems

Chapter 1 Foundations of Information Systems in Business

What is E-Business?

Using Internet technologies to empower Business processes Electronic commerce Enterprise collaboration within a company Collaboration with customers, suppliers, and other business stakeholders In essence, an online exchange of value

Chapter 1 Foundations of Information Systems in Business

E-Business Use

Reengineering Internal business processes Enterprise collaboration systems Support communications, coordination and coordination among teams and work groups Electronic commerce with customers and suppliers Buying, selling, marketing, and servicing of products and services over networks

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How E-Business is Being Used

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Types of Information Systems

Operations Support Systems Efficiently process business transactions Control industrial processes Support communication and collaboration Update corporate databases Management Support Systems Provide information as reports and displays Give direct computer support to managers during decision-making

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Purposes of Information Systems

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Operations Support Systems

What do they do? Efficiently process business transactions Control industrial processes Support communications and collaboration Update corporate databases

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Types of OSS

Transaction Processing Systems Record and process business transactions Example: sales processing, inventory systems, accounting systems Process Control Systems Monitor and control physical processes Example: using sensors to monitor chemical processes in a petroleum refinery Enterprise Collaboration Systems Enhance team and workgroup communication and productivity Example: email, video conferencing, chat
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Chapter 1 Foundations of Information Systems in Business

Two Ways to Process Transactions

Batch Processing Accumulate transactions over time and process periodically Example: a bank processes all checks received in a batch at night Online Processing Process transactions immediately Example: a bank processes an ATM withdrawal immediately
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Chapter 1 Foundations of Information Systems in Business

Management Support Systems

What do they do? Provide information and support for effective decision making by managers Management information systems Decision support systems Executive information systems

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Types of Management Support Systems

Management Information Systems (MIS) Reports and displays

Example:

daily sales analysis reports, production performance, cost trend reporting systems

Decision Support Systems (DSS) Interactive and ad hoc support

Example:

a what-if analysis to determine where to spend advertising dollars, product pricing, profitability forecasting and risk analysis systems

Executive Information Systems (EIS) Critical information for executives and managers from MIS and DSS
Example:

easy access to actions of competitors

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Chapter 1 Foundations of Information Systems in Business

Other Information Systems

Expert Systems - provide expert advice Example: credit application advisor Knowledge Management Systems - support creation, organization, and dissemination of business knowledge throughout company Example: intranet access to best business practices Strategic Information Systems - help get a strategic advantage over customer Example: shipment tracking, e-commerce Web systems Functional Business Systems - focus on operational and managerial applications of basic business functions Example: accounting, finance, or marketing
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Chapter 1 Foundations of Information Systems in Business

IT Challenges and Opportunities

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Measuring IT Success

Efficiency Minimize cost, time, and use of information resources Effectiveness Support business strategies Enable business processes Enhance organizational structure and culture Increase customer and business value

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Developing IS Solutions

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Ethical Responsibilities

What uses of IT might be considered improper or harmful to other individuals or society? What is the proper business use of the Internet or a companys IT resources? How can you protect yourself from computer crime? What does it take to be a responsible end user of information technology?

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Challenges and Ethics of IT

Application of IT Customer relationship management Human resources management Business intelligence systems Potential Harm Infringements on privacy Inaccurate information Collusion Potential Risks Consumer boycotts Work stoppages Government intervention Possible Responses Codes of ethics Incentives Certification
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Chapter 1 Foundations of Information Systems in Business

IT Careers

Economic downturns have affected all job sectors, including IT Rising labor costs are pushing jobs to India, the Middle East, and Asia-Pacific countries However, IT employment opportunities are strong, with new jobs emerging daily Shortages of IT personnel are frequent The long-term job outlook is positive and exciting

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IT Careers

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IT Careers

Job increases will be driven by Rapid growth in computer system design and related services The need to backfill positions Information sharing and client/server environments The need for those with problem-solving skills Falling hardware and software prices, which will fuel expanded computerization of operations
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Chapter 1 Foundations of Information Systems in Business

The IS Function
A

major functional area of business An important contributor to operational efficiency, employee productivity, morale, customer service and satisfaction A recognized source of value to the firm A major source of information and support for decision making A vital ingredient in developing competitive products and services in the global marketplace A dynamic, rewarding and challenging career opportunity A key component of todays networked business A strategic resource
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System Concepts: A Foundation

System concepts help us understand Technology: hardware, software, data management, telecommunications networks Applications: to support inter-connected information systems Development: developing ways to use information technology includes designing the basic components of information systems Management: emphasizes the quality, strategic business value, and security of an organizations information systems
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Chapter 1 Foundations of Information Systems in Business

What is a System?

A system is A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives By accepting inputs and producing outputs In an organized transformation process

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Basic Functions of a System

Input Capturing and assembling elements that enter the system to be processed Processing Transformation process that converts input into output Output Transferring transformed elements to their ultimate destination

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Cybernetic System

All systems have input, processing, and output A cybernetic system, a self-monitoring, selfregulating system, adds feedback and control: Feedback is data about the performance of a system Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal

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A Business as a System

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Other System Characteristics

If a system is one of the components of a larger system, it is a subsystem The larger system is an environment Several systems may share the same environment Some may be connected via a shared boundary, or interface Types of systems Open Adaptive
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Chapter 1 Foundations of Information Systems in Business

Components of an IS

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Information System Resources

People Resources Specialists End users Hardware Resources Machines Media Software Resources Programs Procedures Data Resources Product descriptions, customer records, employee files, inventory databases Network Resources Communications media, communications processors, network access and control software Information Resources Management reports and business documents using text and graphics displays, audio responses, and paper forms
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Chapter 1 Foundations of Information Systems in Business

Data Versus Information

Data are raw facts about physical phenomena or business transactions Information is data that has been converted into meaningful and useful context for end users Example: Sales data is names, quantities, and dollar amounts Sales information is amount of sales by product type, sales territory, or salesperson

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IS Activities

Input of data resources Data entry activities Processing of data into information Calculations, comparisons, sorting, and so on Output of information products Messages, reports, forms, graphic images Storage of data resources Data elements and databases Control of system performance Monitoring and evaluating feedback
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Chapter 1 Foundations of Information Systems in Business

Recognizing IS

Business professionals should be able to look at an information system and identify The people, hardware, software, data, and network resources they use The type of information products they produce The way they perform input, processing, output, storage, and control activities

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